SHANGHAI, Jan 25 (Reuters) - China Merchants Bank (CMB) will next week sharply tighten eligibility rules for mainlanders to open accounts at its Hong Kong branches, the latest move by Chinese lenders to curb capital outflows as Beijing steps up efforts to temper a slide in the yuan.
Starting Feb 1, applicants for account opening at CMB’s Hong Kong branches, as well as at Wing Lung Bank, controlled by CMB, must have assets at the bank averaging 5 million yuan ($727,018.93) each day over the past three months, a 100-fold increase from the 50,000 yuan threshold previously, CMB said in a notice.
The notice, distributed by CMB’s headquarters to its nationwide outlets that handle applications from mainland clients, was obtained by Reuters, and confirmed by the bank’s client service department.
Chinese banks, under pressure from the country’s foreign exchange regulators, have already taken a series of measures to restrict capital outflows, in a bid to ease depreciation pressure on the yuan.
The yuan fell nearly 7 percent against the dollar last year, the biggest decline since 2009 as worries about the economy and expectations of a faster pace of U.S. interest rate increase triggered an outflow of funds.
In November, China’s forex watchdog started vetting outbound payments worth $5 million or more, and starting Jan 1, individuals purchasing forex at banks were banned from using the money for investment purposes, such as buying overseas properties and certain types of insurance.
Privately, wealth managers say once the money is in Hong Kong accounts, it would be difficult for regulators to track how the money is used afterwards.
But opening accounts in Hong Kong is also getting more difficult for Chinese individuals. Mainland applicants need to wait for four to five months to open Hong Kong accounts via Industrial and Commercial Bank of China (ICBC), according to ICBC’s Shanghai branch, and three of the city’s outlets.
CMB, which already strengthened approval for mainlanders’ Hong Kong account openings last December, said that starting next month, the bar would be further raised.
“Clients who don’t meet the asset requirement (of 5 million yuan) are banned from this business,” according to the notice. ($1 = 6.8774 Chinese yuan renminbi) (Samuel Shen and John Ruwitch)